Stock Code: 603950        Stock Name: Changyuan Donggu         Announcement No.: 2021-012

Xiangyang Changyuan Donggu Industrial Co., Ltd.

Regarding the Company's Intention to Sign with Shiyan Industrial New Area Management Committee

Announcement on Signing the "Project Investment Agreement"

Special Reminder:

1. Xiangyang Changyuan Donggu Industrial Co., Ltd. (hereinafter referred to as the "Company" or "Party B") intends to sign a "Project Investment Agreement" (hereinafter referred to as the "Investment Agreement") with Shiyan Industrial New Area Management Committee (hereinafter referred to as "Party A"), with an estimated total project investment of approximately 600 million yuan. The total amount of this proposed investment project is the planned investment amount. The Company may adjust it later based on specific circumstances such as fundraising, land acquisition, and support policies. There is a risk that the Company's actual investment amount may differ from the project investment plan. The actual investment amount shall prevail. Investors are advised to pay attention to the risks.

2. The project land involved in this proposed investment agreement needs to be handled in accordance with current national laws and regulations and normal land use procedures and acquired through bidding, auction, or listing transfer. There are uncertainties regarding whether the land use right can be successfully acquired, the final transaction price of the land use right, and the acquisition time.

3. The investment agreement signed this time does not constitute a significant impact on the Company's operating income, net profit, and other production and operations for the year 2021, and its impact on the Company's long-term operating performance in the future is uncertain.

I. Investment Overview

1. Basic Information of the Investment

The Company plans to sign a "Project Investment Agreement" with Shiyan Industrial New Area Management Committee. The Company intends to construct an automobile engine cylinder block, cylinder head, and parts project on the west side of Dongli Road, Zone B, Shiyan Industrial New Area (adjacent to Dongfeng Commercial Vehicle Company's Powertrain Plant). The total project investment is approximately RMB 600 million, with funding from the Company's own funds or self-raised funds.

2. The 18th meeting of the Third Board of Directors of the Company passed with 11 votes in favor, 0 votes against, and 0 abstentions, and the 15th meeting of the Third Supervisory Board passed with 3 votes in favor, 0 votes against, and 0 abstentions, reviewing and approving the " Proposal on Signing the "Project Investment Agreement" with Shiyan Industrial New Area Management Committee 》 , according to the "Articles of Association" and the "Shanghai Stock Exchange Listing Rules", this foreign investment matter, after being approved by the Board of Directors, still needs to be submitted to the Company's General Meeting of Shareholders for deliberation.

3 , the Company's Board of Directors authorizes the Company's management to sign contracts, and to establish a wholly-owned subsidiary within the scope of the aforementioned amount and participate in land "bidding, auction, and listing" work and other related follow-up specific implementation matters.

4 , The signing of this "Project Investment Agreement" does not constitute a related party transaction, nor does it constitute a major asset reorganization as stipulated in the "Measures for the Administration of Major Asset Reorganizations of Listed Companies".

II. Basic Information of the Counterparty

1 , Name: Shiyan Industrial New Area Management Committee

2 , Nature: Local Government Agency

3 , Relationship with the Company: No related party relationship with the Company

III. Main Content of the Agreement:

Party A: Shiyan Industrial New Area Management Committee

Party B: Xiangyang Changyuan Donggu Industrial Co., Ltd.

1 , Basic Information of the Project

(1) Project to be invested and constructed by Party B: Automobile Engine Cylinder Block, Cylinder Head, and Parts Project. Mainly engaged in the production and sales of automobile engine cylinder blocks, cylinder heads, connecting rods, and the construction of supporting facilities such as workshops, offices, and R&D centers.

(2) Party B must register a new company with an independent legal personality (wholly-owned subsidiary) in Zhangwan District, Shiyan City, within 60 days after signing the investment agreement, and operate and pay taxes in Zhangwan District for no less than 15 years in accordance with the law.

2 , Project Land:

The project is located on the west side of Dongli Road, Zone B, Shiyan Industrial New Area (adjacent to Dongfeng Commercial Vehicle Company's Powertrain Plant), with a total land area of approximately 150 mu, subject to the actual occupied red line.

3 , Investment Intensity and Requirements:

(1) Party B's project total investment is approximately 600 million yuan, of which 300 million yuan is fixed asset investment.

(2) Party B's new company project must go through procedures for engineering reporting, quality and safety supervision, and construction permits in accordance with statutory infrastructure procedures; conduct environmental impact assessments as required, actively fulfill ecological and environmental protection obligations; and carry out construction in accordance with the "three simultaneous" requirements for safe production. Party B shall be responsible for all fire and safety accidents that occur.

(3) Within two years after Party B's new company project is completed and put into operation, the tax contribution intensity should reach 170,000 yuan/mu/year.

4. The content of this proposed agreement is still under negotiation and remains uncertain. The final content shall be subject to the "Project Investment Agreement" formally signed by both parties.

IV. Impact on the Company

The Company's current engagement with Shiyan Industrial New Area Management Committee on the "Project Investment Agreement" will effectively increase the Company's production capacity and improve production efficiency, which aligns with the Company's overall strategic layout, contributes to the Company's long-term development, and further enhances the market share of the Company's products.

The performance of this agreement does not affect the independence of the Company's business, and the Company will not become dependent on Party A due to the performance of this agreement. The implementation and construction of this project require a certain period and will not have a significant impact on the Company's operating performance for the year 2021.

V. Risk Warning

1 , The source of funds for this project investment is own funds or self-raised funds, and there is uncertainty as to whether the funds can be in place on time. Fundraising during the investment and construction process, changes in credit policies, and the smooth flow of financing channels will subject the Company to certain financial risks.

2 , This project investment is based on the Company's strategic development needs and judgment of the industry market outlook. However, there are certain uncertainties in industry development trends, market changes, and the business development capabilities of the operating team, which will have an uncertain impact on the realization of future operating benefits.

3 , The acquisition of project land still needs to follow the "bidding, auction, and listing" transfer procedures in accordance with relevant regulations, which has certain uncertainties. This project involves relevant approval matters such as project establishment, environmental protection, planning, construction permits, environmental assessment, and safety assessment, and also requires approval from relevant authorities, which has certain uncertainties.

4 The project investment amount, investment intensity, tax, and other figures in the investment contract are all planned or estimated figures. Various uncertain factors may be encountered during the project construction process, which may lead to significant uncertainty regarding whether the project can be started, completed, and officially put into operation within the time limit stipulated in the contract. At the same time, changes in future market conditions will also have an uncertain impact on the realization of income and tax. It is expected that this project will not have a significant impact on the company's operating performance in the short term.

5 The terms regarding output value, tax contribution, etc. in this contract do not represent the company's forecast of future performance, nor do they constitute a performance commitment to investors. The company solemnly reminds investors to invest rationally and be aware of investment risks.

Six, Documents for Inspection

1 Resolution of the 18th Meeting of the Third Board of Directors of the Company;

2 Resolution of the 15th Meeting of the Third Board of Supervisors of the Company.

This is hereby announced.

Xiangyang Changyuan Donggu Industrial Co., Ltd.

Board of Directors

2021 March 23